Supply chains are the lifeblood of modern business but they are often notoriously frail in certain areas. Every aspect of production, from sourcing and manufacturing to distribution hangs in the balance of something that the advent of modern technology has made very simple to disrupt.
Megan Stowe, Intel's international supplier diversity manager. Photo: Intel
The atmosphere regarding industry and technology has been forever changed by the ongoing coronavirus pandemic. The need for cybersecurity has become more apparent with both an increasingly digitalised workforce and a larger percentage of people working from home, which has also presented new niches in the defence of supply chains as attacks on industrial complexes and infrastructure have become more common.
Read more: IE talks cybersecurity, industrial infrastructure & digitalisation with Kaspersky
Sustainability is the goal of pandemic recovery. With supply chain upheaval, many business and institutions are looking for alternative ways of sourcing the parts they need, which has led to additive manufacturing - or 3D printing - becoming more of a force within the industry zeitgeist.
Read more: High-flyers: IE talks to Essentium about its US Air Force contract
US-based tech company Intel is one such business leading the charge for supply chain and industrial sustainability. Today, Industry Europe connected with Megan Stowe, the Greater European Region Strategic Sourcing Director & International Supplier Diversity Manager at Intel to discuss its plans for a more responsible future.
Industry Europe: Thanks for speaking with us, Megan. It's quite clear that the pandemic has revealed several flaws in global supply chains. In your opinion, what are the major areas for improvement?
Megan Stowe: The biggest issue is businesses not taking the correct business continuity plans (BCPs). When your entire supply chain goes down, as we've seen with the horrible disaster we're currently facing, it's come to light that they weren't fit for purpose. At Intel, we're very lucky because we had appropriate BCPs in place and as soon as we saw Covid starting to hit China and central Asia, we pulled together a management review committee to see where our gaps were and review the contingencies in place.
Overall, we were slightly ahead of the curve. As far as all industries are concerned, businesses must make sure they have the appropriate measures in place to be able to deal with crises such as these and to fill in those gaps where possible.
It is not all negative. Out of Covid, some new businesses have thrived and they've come about filling in niches and gaps in industry.
IE: There's a lot of talk about the shipping of vaccines - known as "cold chains" - which are vital to the pandemic recovery process. Are Intel involved in this in any way?
MS: Not directly that I’m aware of. We have offered assistance and will continue to monitor for opportunities to help out.
Read more: Covid vaccine supply chain targetted by hackers, warns IBM
IE: What effect has Brexit had on supply chains? What plans do Intel have in dealing with the different Brexit scenarios: deal, no-deal, etc.
MS: We've been planning for a no-deal just because we like to prepare for the worst-case scenario. Over the last two years, we've been looking at it through our contracting: making sure there are clauses in place and making sure shipping routes are going to work logistically. In preparation, we have been analysing contingencies such as air freight vs. land freight in case shipping is disrupted.
I think we will face major issues at customs. That's where most supply chains will see the greatest effect.
Credit: Intel
IE: What kinds of new technologies or practices are being implemented to supplement the original hitches or gaps in pre-Covid supply chains?
MS: I think our approach is very different from other companies. For us, it's been about getting our product from Asia and Ireland to the US and shipping our various parts around the world.
We've been working closely with airlines and partnering with companies, leveraging our passenger numbers as well as freight - which is something we've never done before - normally, they're handled in very different camps. People are people, cargo is cargo. We've been reviewing some of those relationships to see how we can work with some of those airlines because charter flights and freight airlines have been constrained or completely grounded owing to the pandemic.
It appears that from our standpoint the primary concern is forging new partnerships to reduce disruptions in our supply chains.
IE: How do you think supply chains will change going forward into 2021 and beyond?
MS: I think the effects of Covid will still be felt for years to come. There is still going to be uncertainty and businesses need to make sure they have robust BCPs but they really need to make sure that, regardless of stress testing, if something happens, businesses need to be able to review what flaws are present and how to amend them.
These contingencies must be put to the test. It's not enough to just think: "okay, in the event of a natural disaster, we'll just switch our supply base." In this regard, I think proper BCP planning is imperative for sustainability for all businesses, whether large or small and to keep stress testing potential weak spots.
The pandemic has revealed some flaws in the BCPs of our suppliers, other companies' suppliers and so forth.
IE: In recent months, there seems to have been a trend, particularly in manufacturing, that have decided to deal with the frozen supply chains by purchasing 3D printers and developing missing parts in-house instead of importing them. Do you think this will affect reliance on global supply chains?
MS: I don't see why it wouldn't personally. For some companies or industries, there is and will continue to be, a drive to localisation or regionalisation. For others, the economic benefits of a global supply chain will persist and we’ll see a change in the footprint as companies may diversify from some countries, such as China, but continue to leverage a global supply chain.
Supply Chain
IE: You've mentioned stress tests being vital to supply chain sustainability. What do they entail and what types are performed?
MS: I think it's really looking at where the issues happened throughout Covid and making sure that any of those gaps are covered. For instance, if factories are closed or airlines are grounded, it can have severe effects on your supply chains.
It's about making sure there are workable alternatives to these situations: be they working with governments, or working on different innovative areas. We can look at specific areas, for instance, if a certain company is closed down and they supply an essential part for our production, we would look if we can temporarily look to an alternate supplier.
It's really about looking at those intricate areas and coming up with innovative ideas as to how we can change the way we operate instead of just relying on changing suppliers or areas.
IE: Obviously, because chains have been hit by the pandemic, are there any major areas for improvement for companies? Ultimately, why were supply chains so devastated by the pandemic?
MS: The reason why supply chains were hit so hard by Covid was that we've not seen a pandemic on this scale since the Spanish Flu [in 1918]. The whole world was ground to a halt. No one could do anything. It was particularly devastating for many because there was no way we could predict that this would happen.
I think now that we have experienced it again, we can look at those gaps and fill in the gaps in the supply chains and make them more durable for the next natural disaster. We can look at innovative and sustainable ways of filling these niches.
Businesses should be able to share learning on how to best prepare should something like this happen again. We should have plenty of time, as I'd hope the next major pandemic won't hit us in our lifetimes. We, as an industry, must share our findings and understanding going forward to prevent such damage being caused to industry again.
IE: Intel has committed to responsibility in the supply chain. Workers at the bottom of the chain are more likely to face displacement, poverty and job scarcity. Would you mind discussing in more detail your plans for avoiding this?
MS: Here at Intel, we have achieved a lot in the "responsible sourcing" side of things. Be it our dedication to "conflict-free minerals" - minerals that have been mined without directly benefitting armed groups in certain countries - or within our Supplier Diversity programme.
The programme ensured that our supply chain is representative of the world around us, including being led by female-led businesses, veteran-owned businesses, businesses run by BAME individuals, LGBTQ+-led businesses and the like. Often, these businesses are small-to-medium-sized.
We have set targets for our 2030 goals including industry-wide businesses, with changes targetted at whole supply chains or industries. It's not enough for one business to adopt these changes, everyone has to. An example of this would be increasing the number of women and minorities in executive positions within a company. In this regard, we can only do so much, so unless the whole tech industry gets involved, we're not going to see a massive shift.
We're very proud of those goals. They're very big and audacious goals, I think. But unless we all go along together and make the world a better place to live in, we're not going to get there.
From a responsible minerals point-of-view, we like to make sure the entire industry is following suit. We are working with companies with whom we may not require minerals for our chips, but we want to make sure other technology businesses have access to responsibly-sourced access to the metals they require. We want to really try and drive these industry trends.
IE: How will this dedication to responsibility change as supply chains become increasingly automated as we move closer towards concepts such as Industry 4.0?
MS: I don't think you can completely substitute human labour with machines. You can't remove the emotional element and get a similar outcome. There is always judgement needed in supply chains. You can use machine learning and autonomous processes to make it more efficient and drive innovation to a degree, but you will always need the people. I don't think we'll ever see a supply chain workforce consisting solely of robots.
IE: What measures will Intel be taking to uphold this within its own supply chain networks?
MS: Right now, we're working on becoming more efficient and achieving some of the goals we've set out by digitalising manual-type processors, making sure we have the right tools and processes in place today to make us more efficient and risk-averse. With machinery, you can often get it to react faster to some situations. It will be about using it to become a far more efficient business.
IE: When dealing with countries with poorer human rights records, how can you make sure Intel's policies are enforced and make sure workers are protected?
MS: If you think of a lot of the work we do in the responsible minerals sector, we make sure to do thorough audits with a lot of our companies. There were pitches this year from Adam Schafer, the director of supply chain sustainability at Intel and a member of the board of directors at Responsible Business Alliance, who handles sustainability globally, in countries such as DR Congo or the Dominican Republic.
We try to look at and understand every process of the mineral supply: going into mines and checking conditions and ensuring no child or slave labour has been used in extraction. We also partner with smelters to make sure they only receive minerals that have been audited and certified as being responsibly-sourced.
We do significant checks into every aspect of our supply chains.
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